EU development cooperation.
Where have we got to? What’s next?
Report on a conference for EU Change-makers
held at ODI, London, on 24 & 25 June 2013
Raphaëlle Faure, Mikaela Gavas, Elize Hefer, Mira Markova, Simon Maxwell
July 2013
July 2013
EU development cooperation.
Where have we got to? What's next?
Report on a conference for EU Change-makers held at ODI,
London, on 24 & 25 June 2013
Raphaëlle Faure, Mikaela Gavas, Elize Hefer, Mira Markova, Simon Maxwell
The EU Change-makers agree:
 Post-2015, the development agenda will change, with
poverty reduction still a priority, but accompanied by a
greater emphasis on tackling global problems.
 EU development cooperation will need to be transformed to
remain relevant.
 Relevance in the future will require high-level skills in
brokering global deals, better use of financial instruments,
improved partnerships, and effective joining up across policy
domains.
 EU Member States have work to do in fixing the role of EU
institutions: a classic challenge of collective action.
 The EU Change-makers and the European Think-Tanks Group
can help to construct EU-wide consensus.
Shaping policy for development
odi.org
Acknowledgements
We would like to thank all our EU Change-makers for their participation and contributions
to the conference and their support over the years for ODI’s EU project, the European
Development Cooperation Strengthening Programme (EDCSP). We would also like to
thank DFID’s Europe Department for its generous financial support and guidance. The
authors of this report remain solely responsible for its content.
Table of contents
Acknowledgements
ii
Abbreviations
iii
Executive summary
v
Introduction
The collective action challenge facing the EU
1
2
1 The challenge of a new development agenda
1.1 Shifting realities of the future development landscape
1.2 The new political economy of resources
1.3 Implications for the post-2015 development agenda
1.4 Discussion and key conclusions
4
4
5
7
8
st
2 Reengineering development finance in the 21 Century
2.1 The development assistance landscape in an ‘Age of Choice’
2.2 Rethinking the architecture of development finance
2.3 Discussion and key conclusions
10
10
12
13
3 Managing strategic partnerships in a multi-polar world
3.1 The need for partnerships in international affairs
3.2 Strategic partnerships for improved global governance
3.3 The right partnerships for the EU used in the right way?
3.4 Discussion and key conclusions
15
15
16
16
17
4 Capability and capacity in future EU development cooperation
4.1 How prepared are development agencies for the changing world?
4.2 What capabilities and capacity will the EU need in the future?
4.3 Discussion and key conclusions
19
19
20
21
5 From ideas to practice
23
Appendix 1
Conference programme
25
25
Appendix 2
List of participants
27
27
Appendix 3
Background note – Session 1: The challenges of a new development agenda
(prepared by Mira Markova)
29
29
EU development cooperation.
Where have we got to? What's next? i
Appendix 4
st
Background note – Session 2: Reengineering development finance in the 21
Century (prepared by Mira Markova)
34
Appendix 5
Background note – Session 3: Managing strategic partnerships in a multi-polar
world (prepared by Raphaëlle Faure)
41
34
41
Appendix 6
45
Background note – Session 4: Capability and capacity in future EU development
cooperation (prepared by Raphaëlle Faure)
45
Figures
Figure 1: Volatility in commodity markets (1980-2012)
5
Figure 2: Value of the global resource trade (1998-2010)
6
Figure 3: Share of global production (>5%) of key commodities and water scarcity 6
Figure 4: Domestic revenue, capital flows and ODA in developing countries 20012011
10
Figure 5: Trends in development assistance flows for 2000 and 2009 (in billions) 11
Figure 6: A traffic light approach to risk of irrelevance
20
EU development cooperation.
Where have we got to? What's next? ii
Abbreviations
Abbreviation
Description
ACP
African, Caribbean and Pacific group of states
AU
African Union
BRICS
Brazil, Russia, India, China and South Africa
DAC
Development Assistance Committee
DFID
Department for International Development
DG DEVCO
Directorate-General for Development and Cooperation
ECOWAS
Economic Community of West African States
EEAS
European External Action Service
EU
European Union
FDI
Foreign Direct Investment
LDC
Least developed country
LIC
Lower-income country
MDGs
Millennium Development Goals
MFF
Multiannual Financial Framework
MIC
Middle-income country
NATO
North Atlantic Treatment Organisation
ODA
Official Development Assistance
ODI
Overseas Development Institute
OECD
Organisation for Economic Cooperation and Development
SDGs
Sustainable Development Goals
SMEs
Small and medium enterprises
EU development cooperation.
Where have we got to? What's next? iii
SNEs
Seconded National Experts
UN
United Nations
UNHLP
United Nations High Level Panel
USA
United States of America
EU development cooperation.
Where have we got to? What's next? iv
Executive summary
1.
The ‘EU Change-makers’ group, consisting of senior policy-makers, researchers
and civil society representatives from European Union (EU) Member States, met
in London to address the future challenges of EU development cooperation – and
especially to help shape the agenda prior to the European Parliament elections in 2014,
and the installation of a new European Commission later in the same year.
2.
Re-shaping EU development cooperation can be understood as a collective action
problem, in a world characterised by many examples of poor quality collective
action, or even inaction. The EU currently has exclusive competence in some areas
relevant to development, and shared competence in others, including development aid
and climate change. Member States have choices to make about how to manage
collective action within current arrangements; and, in the longer term, about the
distribution of competences.
3.
The key conclusion is that post-2015, the development agenda will change, with
poverty reduction still a priority, but accompanied by a greater emphasis on tackling
global problems, including security and climate change. EU development
cooperation will need to be transformed to remain relevant. Relevance in the
future will require high-level skills in brokering global deals, better use of financial
instruments, improved partnerships, and effective joining up across policy domains.
4.
Aid will remain an important instrument post-2015, but the number of recipients
of traditional official development assistance (ODA) is likely to shrink, as more
countries reach middle-income status. There may well be a concentration of aid in
fragile states. In these and other countries, there will be multiple sources of finance,
including a rising share from domestic taxation, but also from new donors,
philanthropic organisations and the private sector: recipient countries will often have a
choice of partners. They will also seek new forms of finance, including loan
guarantees, equity stakes and risk capital. While these trends are largely positive, there
are also risks. The volatility of financial flows remains high. It is important that there
be a strong financial architecture to manage economic shocks.
5.
The emergence of new donors is not the only reason for traditional donors, like the
EU, to think long and hard about partnerships with emerging economies. Partnerships
are required to achieve shared goals in a wide range of policy spheres, from
management of the global economy, through climate change, to the mitigation of risks
like disease. Some partnerships will be based on shared values; others will be more
instrumental. Some will be comprehensive; others will not. In all cases, however, they
will need investment in trust-building, institutions and substance – all key
requirements of successful collective action.
6.
In this context, development administrations will need to change substantially. There
will need to be a wide range of skills available, on a wide range of topics, including
those related to brokering global deals and managing partnerships with different kinds
EU development cooperation.
Where have we got to? What's next? v
of countries. The ability to manage relationships and delivery mechanisms across
Government will be essential. This will certainly not be an ‘aid’ ministry, and it
might not even be a separate ministry at all. It is interesting that some countries have
already created, or are thinking of creating, new ministries of ‘globalisation’ or ‘global
issues’, incorporating aid, trade, and climate, alongside foreign policy. Links to macroeconomic policy are also essential.
7.
The EU brings many strengths to the new development agenda. The basic building
blocks are in place, including the creation of the European External Action Service
(EEAS), with the mandate to ensure policy coherence across thematic areas. The
partnership with the African, Caribbean and Pacific (ACP) group of states may also
provide a model of how to engage with developing countries.
8.
However, the silos are strong and well-cemented, both in the Commission and the
Parliament. Examples of successful networking and joined-up action can be found:
Somali piracy is often cited, and the joint work on development and environment for
the post-2015 policy is an example of successful collaboration within the EU.
However, these examples are rare. Capacity is also limited, especially in the area of
professional specialisms.
9.
A possible outcome from next year’s elections and Commission process is a new
vision and new capacity to implement, with strong political leadership, greatly
increased capacity to deliver across sectors, and improved parliamentary
accountability, all backed up by high levels of public support. More likely is
continued but probably slow evolution, marked by a messy debate about the limits of
EU competence and the internal arrangements of EU development cooperation.
10. Of course, it is not axiomatic that the EU will always be the optimal solution. It
would be a mistake to assume the Mt Everest option: always to turn to the EU simply
‘because it is there’.
11. Thus, an important question will be how to identify the EU’s role, and then
incentivise change. Statements of purpose might help, especially if articulated by
those with the capacity to set agendas. It will be important to articulate a positive,
rights-based vision, which emphasises the universality of an agenda that is as relevant
to citizens of the EU as it is to those in emerging economies and developing countries.
Greater engagement of citizens is a priority.
12. Collective action theory suggests that other elements will be needed, including
trust-building measures and the deployment of incentives. Finance is probably a
key incentive. Having a seven-year perspective for the budget and the European
Development Fund (EDF) provides predictability for EU planners, but it may reduce
their responsiveness to signals from stakeholders. There is also a case for building on
areas where the EU has legal competence, for example trade. Another option is to
choose one high profile topic, like building a green economy.
13. Finally, there is an important role for consensus-building and policy engagement
across national boundaries – by policy-makers, but also by parliamentarians and
non-governmental organisations (NGOs). This is exactly the purpose for which the
EU Change-makers group was established. The European Think-Tanks Group1 will be
a key actor in developing new narratives, but also in supporting disparate policy
processes in the EU Member States.
1
The European Think-Tanks Group is a network of leading European think-tanks working in development
cooperation and international relations. The members of the network are the Deutsche Institut für
Entwicklungspolitik (DIE), the European Centre for Development Policy Management (ECDPM), La Fundación
para las Relaciones Internacionales y el Diálogo Exterior (FRIDE) and the Overseas Development Institute (ODI).
EU development cooperation.
Where have we got to? What's next? vi
Introduction
1.
The ‘EU Change-makers’ group consists of senior policy-makers, researchers and civil
society representatives from European Union (EU) Member States, who collaborate to
help shape European development cooperation. They have met on various occasions,
in France, Germany and the United Kingdom (UK). On this occasion, they were
convened in London to address the future challenges of EU development cooperation
– and especially to help shape the agenda prior to the European Parliament elections in
2014, and the installation of a new European Commission later in the same year. The
programme of the meeting is in Appendix 1 and the list of participants, including
invited speakers, in Appendix 2. All participants were encouraged to speak in their
personal capacities. The meeting was held under the Chatham House Rule2.
2.
The starting point is that the basic building blocks of future EU development
cooperation are now in place or shortly would be:
 A new policy framework, Agenda for Change, was launched by the
Commission in October 2011, and endorsed by the Council in May 2012;
 A number of other policy reviews have been completed or were underway:



budget support, social protection, trade and development, resilience, and the
post-2015 framework;
The Multiannual Financial Framework (MFF) covering the period 20142020 is expected to be agreed shortly;
New financial regulations are in the final stages of negotiation, including
the Development Cooperation Instrument (DCI), the European
Development Fund (EDF), the Neighbourhood Instrument, Humanitarian
Aid, and the implementation modalities;
Programming of development aid is underway.
3.
This is therefore an appropriate moment to review progress. At the same time, an
urgent conversation is beginning about the longer-term perspectives. The recent
Commission Communication on post-2015 global goals made clear that the
development context is changing, and that in future, a premium will be placed on
careful coordination of initiatives across traditional spheres of responsibility – linking
development to environment, humanitarian, climate change, trade and foreign policy
concerns. This has implications for the work of all EU institutions and for Member
States.
4.
These immediate and longer-term issues intersect with a third set of concerns, about
the capacities and competences of development agencies. Should they focus on aid
The Chatham House Rule is invoked at meetings to encourage openness and frank discussion. It states that ‘when
a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information
received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be
revealed’.
2
EU development cooperation.
Where have we got to? What's next? 1
alone, or on wider issues as well? What kind of legislative framing is appropriate?
What kind of accountability should be in place? And what kind of staffing is needed?
5.
The conference tackled all these questions. It began, however, with a reflection on the
collective action challenge facing the EU.
The collective action challenge facing the EU
6.
The current global order is characterised by: (1) the (re-)emergence of new global
economic powers, (2) an evolving multilateral architecture with new and stronger
voices from the developing world, and (3) a eurozone crisis which is crippling Europe.
Changing patterns of growth have changed the nature of poverty with an increasing
concentration of poverty in middle-income and/or fragile states, and an increasing
number of poor countries seeking to reduce dependency on aid. The development
discourse is also changing, to one that places more emphasis on mutual interest, global
risks, global commons, and ‘beyond aid’ approaches. This agenda seem to require a
high degree of collective action, and by implication, a multilateral approach.
7.
However, ‘multilateralism is struggling in almost all spheres of global cooperation’3.
David Rothkopf recently commented that: ‘we have gone in a matter of not too many
months from a moment of optimism about multilateralism, to grappling with the dark
frustrations of aimless muddelateralism. Hope is now the thing we are trying to scrape
off the bottoms of our shoes while Europe, the Middle East, our entire global
ecosystem is shuddering from the after-effects of a world that seems to be lacking
effective global institutions’4.
8.
What are the reasons for failing multilateralism? In his recent book, Divided Nations,
Ian Goldin cites: misaligned incentives, short-termism, free-riding, enforcement
problems, and coordination failures5.
9.
Various authors have identified conditions or principles to guide collective action.
These include:
1. Subsidiarity, i.e. not all issues require global collective action;
2. Selective inclusion, i.e. only those most directly affected should be involved in
3.
4.
5.
6.
7.
decision-making on particular issues;
Variable geometry, i.e. different combinations of countries will be needed round
the table for different issues;
Trust needs to be built amongst the partners;
Legitimacy, i.e. institutions need to be representative and accountable;
Enforceability through peer or public pressure;
Positive incentives to encourage compliance and negative incentives to punish
defection.
10. The EU itself is an exercise in collective action, displaying some strengths with
respect to the list above, and some weaknesses. The EU has proven it has the ability to
lead on long-term issues like the environment and development. As a world leader on
the environment, it has set the agenda for the rest of the world. On development, it is
the world’s largest contributor of development aid.
Lamy, P. (2012) ‘Multilateralism is struggling’, a speech delivered at the World Trade Organisation, 24
September 2012 (available at: http://www.wto.org/english/news_e/sppl_e/sppl244_e.htm)
4
Rothkopf, D. (2012) ‘For multilateralism, is this the dark moment before the dawn?’ in Foreign Policy, 18 June
2012
5
Goldin, I. (2013) Divided Nations: Why global governance is failing, and what we can do about it, Oxford:
Oxford University Press
3
EU development cooperation.
Where have we got to? What's next? 2
11. On the other hand, there is clearly a collective action problem at the EU level.
European leaders are currently spending all their political capital on Europe’s internal
problems, and there is no will to coordinate on ambitious global agendas. Global
challenges are so huge and complex that many are retreating into national systems.
The EU ‘risks being eaten for lunch by the Chinese and other increasingly powerful
countries’. With respect to aid, and despite its oft-mentioned contribution of more than
60% of ODA, the EU is less visible as an aid provider than the United States of
America (USA). This has been obvious with regard to the global discussion around the
post-2015 global development framework – although most of the points from the
recent EU Communication were included in the United Nations High Level Panel
(UNHLP) report, the EU has not tried to drive the agenda, especially on areas where
Europe has comparative advantage, such as socio-economic inequality.
12. The EU system is part of the reason for this. It is easier for the EU to exercise global
leadership in policy areas where there is a single authority that can speak on behalf of
Europe, like trade, competition or monetary policy. Development is a shared
competence.
13. Leadership is also important. It needs to be remembered that development is about
politics rather than money, about wrong versus right political decisions, political will
and political leadership. The debate on EU development cooperation therefore needs
to be grounded in mobilising political will and the structures necessary for the EU to
take a global lead.
14. All this said, it is not axiomatic that the EU is the right vehicle in all circumstances for
nations to engage in collective action. The formal Treaty-based competence of the EU
differs across policy areas, with some being exclusive (for example, trade and
fisheries) and others being shared (development aid and climate change). For areas of
shared competence, the EU may undertake activities and conduct common policy, but
not prevent Member States from exercising competence of their own. However, there
is enough flexibility and ambiguity in practice for the balance to shift either towards
greater consolidation or mere cooperation. Member States have choices to make about
how to manage collective action within current arrangements; and, in the longer term,
about the distribution of competences.
EU development cooperation.
Where have we got to? What's next? 3
1 The challenge of a new
development agenda
15. The conference discussed future challenges, with presentations on new ways of
thinking about development, on natural resource scarcity, and on the post-2015
agenda. The overall proposition, tested in discussion, was that the balance of
development work would change, with a shift of emphasis away from traditional
service delivery towards greater engagement with regional and global issues. A
background note prepared for this session is in Appendix 3.
1.1 Shifting realities of the future development landscape
Shifting poverty trends
16. The south is catching up with the north. There is a shift in poverty from lower-income
countries (LICs) to middle-income countries (MICs), with a contested debate about the
future trends. A large amount of poverty is also concentrated in fragile states, a trend
that is likely to intensify in the future. Two significant challenges remain in terms of
persistent poverty: chronic and systemic inequalities, and the question of dealing with
conflict and fragility.
Shifting environmental realities and climate impacts
17. Land and water are becoming scarce, and this is leading to a transformation in tenure
relations in poor countries, particularly in Africa. Furthermore, climate impacts are
becoming more obvious. A recent World Bank report states that lending for adaptation
has doubled between 2004 and 2012, implying that the big adaptation challenges are
already present and need to be addressed.
Shifting social realities
18. Youth unemployment will continue to grow throughout the decade, while China and
many countries in Europe will face the challenge of an ageing population. In the
Organisation for Economic Cooperation and Development (OECD) countries, the
workforce will shrink significantly over the next few decades, and there may be
exponential increases in migration volumes. Social transformations have been
underpinning all other developments on a global level. Since the Arab Spring, the
significance of information flows has been redefined. While information does not
automatically lead to accountability or change, it certainly affects it and triggers
involvement.
EU development cooperation.
Where have we got to? What's next? 4
The development agenda in a world of global challenges
19. The list of global governance challenges (climate, tax, cyber aggression, transnational
criminality, financial regulations, etc.) is impressive, which implies that leadership
will be a very important commodity in a multipolar world.
20. The relationship between development and any given global public policy challenge or
global public policy good is always going to be partial and contributory. The challenge
is to think strategically about how development resources fit into the broader elements
of climate change or climate security.
21. Finally, it is important to focus on the determination to eradicate absolute poverty
because poverty reduction is the best case that donor agencies have in global
governance at the moment. It is also important to not lose sight of what has already
been achieved and what can be achieved in the future.
1.2 The new political economy of resources
22. The trends previously identified come sharply into focus when considering natural
resources. The world is undergoing a period of intensified resource stress, driven in
part by the scale and speed of demand growth from emerging economies and a decade
of tight commodity markets. This has resulted in the growing volatility in commodity
markets over the last decade (Figure 1). The emerging environmental threats, such as
climate change and water scarcities, the shift in consumer power from west to east,
and the concentration of resource ownership, are factors that are changing the rules of
the resources game. Whether or not resources are actually running out, the outlook is
one of supply disruptions, volatile prices, accelerated environmental degradation and
rising political tensions over resource access.
Figure 1: Volatility in commodity markets (1980-2012)
Source: Chatham House calculations based on IMF commodity price data
23. Many of the fundamental conditions that gave rise to the tight markets in the past 10
years will remain in the future. There will be a continued demand growth for most
major resources, and emerging economies will be at the centre of the new evolving
political economy.
24. Resource trade has grown by nearly 50% in terms of weight in the previous decade,
due to the expanding trade in oil, iron, steel, coal, and cereals, and by five times in
EU development cooperation.
Where have we got to? What's next? 5
terms of value (Figure 2). While most of this can be attributed to China, OECD
countries and emerging economies, a wave of developing countries will become
important resource consumers in the next decade. They are likely to include Iran,
Thailand, Turkey and Vietnam. Large-scale resource extraction remains concentrated
in a handful of countries, while a new wave of increasingly important producers has
emerged in the wake of the resource boom (such as Angola and Peru). Despite the socalled ‘new scramble for Africa’, African countries are absent from the list of major
producers (Figure 3). Many agricultural or resource-seeking investments in the
continent remain speculative.
Figure 2: Value of the global resource trade (1998-2010)
Source: Chatham House Resource Trade Database, BACI and COMTRADE (2012)
Figure 3: Share of global production (>5%) of key commodities
and water scarcity
Source: Chatham House analysis based on FAO, EIA, IFA and USGS data
EU development cooperation.
Where have we got to? What's next? 6
25. The dynamics of resource production and consumption are interlinked through
markets, trade and the global environment. At a time when the global economy is
becoming increasingly dependent on resource trade, trade is becoming a frontline for
conflicts over resources. However, it is resource politics, and not environmental
preservation or sound economics, which dominates the global agenda. This trend is
already manifesting through trade disputes, climate negotiations, market manipulation
strategies, aggressive industrial policies and the scramble to control frontier areas. The
quest for resources will put ecologically sensitive areas under continuous pressure
unless a cooperative approach is taken.
26. Developing collaborative governance structures will be critical for dealing with future
resource challenges. Furthermore, investing in the environmental and social resilience
of developing economies and in the emerging players such as Iran and Vietnam will be
critical to fostering long-term resource security. It will be critical to engage the next
wave of new resource producers and consumers in constructive dialogues and
initiatives.
1.3 Implications for the post-2015 development agenda
27. It is important that the future challenges be reflected in the post-2015 development
framework. The UNHLP report on the post-2015 development agenda has just been
published, and provides an opportunity to test whether or not this is likely.
28.
The report provides recommendations for a global development framework,
suggesting five transformative shifts.
29. The first principle of ‘leave no one behind’ sets out a poverty-eradication agenda with
the ambition to reach all excluded groups. This emphasises that the new development
agenda would continue to contain a significant contribution to poverty reduction.
Furthermore, in order to address inequality, the report recommends disaggregating the
data for the achievement of each recommended target by income quintile and by social
group (sex, age, race). No target should be considered met unless it is met for each
social group.
30. In addition, the report recommends four other shifts: (a) focusing on sustainable
development, (b) peace and good governance, (c) pushing for economic
transformation, and (d) forging a new global partnership. These shifts all signal a
changing agenda, albeit in different ways.
31. The report has been cautious, however, on elements of the wider agenda, such as trade
or climate change. This is because the authors are of the opinion that the Millennium
Development Goals (MDGs) have been weak where there were no measurable targets
and where international agreements are required to meet targets. These constraints
apply to both trade and climate.
32. Furthermore, not all social and economic problems have goal-shaped solutions – a set
of goals is not a substitute for a treaty or detailed regulations.
33. The most compelling part of the future development agenda is its universalism, the
unequivocal commitment that no citizen in the world would be left behind. The Panel
sought to create a set of universal goals that apply to all countries, tackle excessive
consumption and production on the one hand, and extreme poverty on the other. Its
universal appeal, combined with its focus on the most disadvantaged, makes the report
relevant for the future rather than the past. If universal goals are to be taken seriously,
however, they have to extend beyond the normal agendas of development agencies.
EU development cooperation.
Where have we got to? What's next? 7
1.4 Discussion and key conclusions
34. Points raised included the following:
 The 2030 timeframe as a horizon is out of sync with the political cycle,






which raises the question of how to connect the political cycle with the
universal ambition.
Tackling inequality is one of the greatest challenges that lie ahead and a
specific target ought to have been included in the UNHLP report. This
would have allowed for the provision of a clear definition of the different
aspects and types of inequality that needs to be tackled. This comprises a
long list, including reducing wealth gaps, improving child survival, and
improving antenatal care. The equity-based component is in fact implicit: in
pursuit of the universal goal of ‘no child dying’, we would halve the death
rate between the richest and poorest in the next five years; in pursuit of the
universal ambition in education, we would half the gap between the best
performing part of a country and the worst performing part of the country.
Discussions on gender equality have been particularly contentious within
the preparation of the UNHLP report. The report features an illustrative goal
about ending child marriage, while various other concrete suggestions have
been dismissed. There nevertheless seems to be a consensus among the
development community that there ought to be a stand-alone goal on gender
equality.
In order to meet the 0.7% target by 2015, an 80% increase in aid levels is
necessary, which makes reaching the promised aid levels practically
impossible. There is a real condemnation on the part of LDCs and LICs of
countries that have not reached that target.
There is a general lack of faith that development agencies and actors will
deliver their goals and promises in the future. This is a rather political issue
on which Europe does not seem to be assuming a very strategic position.
The focus is predominantly on internal politics, while many G77
discussions are necessary to achieve an agreement. On the other hand, no
targets can be forced and it is important to aim for aid levels to be increased
even if the target year for reaching the 0.7% goal must shift beyond 2015.
Partnerships are necessary in order to engage in innovative action with
those who are willing to commit funds. The distinction between national
and global interests is becoming blurred and it is currently not clear whether
we have gone beyond these extremes and can promote a better
understanding. Universal goals are best interpreted through national targets:
a goal targeting hunger, for example, would mean both increasing
agricultural productivity in Africa, but also reducing food waste and
changing consumer patterns in Europe.
In terms of the content of their work and the quality of their aid delivery
programmes, institutions such as the UK’s Department for International
Development (DFID), the EU and the World Bank, present a disjuncture
between clear working agendas and disappointing levels of achievement. It
is unclear whether any of these institutions are strong on their policy areas.
Furthermore, there seems to be a tremendous path dependency and
momentum in development, whereas tackling future challenges would
require different instruments, institutions and competencies.
35. In conclusion, there is overall agreement and recognition that the development agenda
is changing. The recommended goals and targets for a post-2015 development agenda
EU development cooperation.
Where have we got to? What's next? 8
ought to apply to all countries, while recognising that the most intense problems in the
world are those of the poorest people. There is a need for a universal appeal, which
will tackle excessive consumption and production, but will also focus on tackling the
problems of the poorest and most disadvantaged. Furthermore, the need for
universality implies a growing need for global collective action.
36.
The UNHLP report has the potential to be a report for the future rather than the past,
due to its universality clause and the focus on sustainable development. However, the
way the report has been operationalised does little to distinguish it from a continuation
of the conventional north-south relations, causing its innovative ideas to be easily
overlooked. If universal goals are to make a serious impact, they have to be truly
innovative. Furthermore, if sustainable development is put at the core, then it is
necessary to address the issue of common but differentiated responsibilities, for
example for low carbon in urbanisation. There have been no discussions about the
extent to which global powers will engage in the agenda for global collective action.
Such issues are also on emerging economies’ agendas (and the biggest emitters, such
as India and China) and it is widely recognised as a matter for cooperation. An
opportunity has therefore been missed to use the report as an instrument to push for
global cooperation.
37. The most striking and compelling part of the future development agenda is its
universality. However, there can be many potential definitions of universality – from
the concept of leaving no one behind, to the idea that rich countries have to change
their patterns of consumption. There does not seem to be a common agreement on this.
In addition, many least development countries (LDCs) are worried that a universal
agenda may divert attention away from poverty reduction, especially since European
countries are failing to reach their 0.7% targets.
38. Traditional development agencies are starting to recognise the need for selfreinvention, which can be a big challenge, requiring professional skills and
instruments that are not currently available. However, many organisations are also
alarmed by the amount they will have to change their missions, instruments and
competencies in order to be able to deliver on the new development agenda. They are
worried about the need to reengineer themselves in a world where multilateral
agreement is difficult to reach and solutions to collective action problems are hard to
find.
EU development cooperation.
Where have we got to? What's next? 9
2 Reengineering
development finance in
the 21st Century
39. The changes underway are likely to affect all development agencies and are largely
driven by an understanding that the nature of development finance is changing. The
mixture of financial resources available to developing countries is in flux. Countries
now have a wider range of options for financing their development – a trend that is
likely to accelerate in the future and jeopardise the role of traditional aid agencies. A
background note prepared for the session is in Appendix 4.
2.1 The development assistance landscape in an ‘Age of Choice’
40. The total envelope of resources to and in developing countries has expanded in the last
10 years (Figure 4). Both domestic resource mobilisation (taxation) and cross-border
flows have expanded fivefold in the last five years. However, domestic resource
mobilisation was, is and will continue to be the largest source of development finance.
Figure 4: Domestic revenue, capital flows and ODA in
developing countries 2001-2011
Source: International debt statistics and World Development Indicators 2013 refer to LICs and MICs –
General government revenue refers to emerging and developing economies – World Economic Outlook
(April 2013)
EU development cooperation.
Where have we got to? What's next? 10
41. Apart from expanding in volume, the development finance envelope has also changed
in composition. The share of traditional development assistance is falling. Although
ODA was roughly three quarters of the total envelope of external assistance in 2000,
this share has been dramatically reduced. On the other hand, the share of nontraditional development assistance (not managed within the circles of bilateral
Development Assistance Committee (DAC) donors and multilateral aid agencies) has
grown dramatically. Total development assistance has increased from $77.1 billion to
$213.5 billion between 2000 and 2009. In 2000, the ‘non-traditional’ component of
these flows was only $5.3 billion, or 8.1% of the total. By 2009, non-traditional flows
had increased tenfold to $53.3 billion, making up 30.7% of total development
assistance (Figure 5). Examples of non-traditional flows include: assistance form nonDAC countries, philanthropic assistance, climate finance and vertical health funds.
USD billions
Figure 5: Trends in development assistance flows for 2000 and
2009 (in billions)
250
Other official flows
200
Climate finance
Social impact investment
150
Global health funds
100
Official concessional
assistance from NTPs
50
Philanthropic assistance and
private giving
Traditional development
assistance
2000
2009
6
Source: Greenhill et al. (2013)
42. The variety of flows that countries can currently access and choose from to finance
their development strategies presents a wide range of choice, carrying both risks and
opportunities. It is important to take the partner country perspective when analysing
the implications of these changes in terms of new actors, new instruments and new
modalities. ODI country studies on Cambodia, Ethiopia and Zambia (as part of the Age
of Choice research project) have refuted the common assumption that extended choice
would bring hurdles associated with fragmentation and the management of multiple
partners. Instead, the growing choice was welcomed by countries and considered as an
opportunity to increase their negotiating power.
43. The falling share of ODA raises questions about the role of bilateral and multilateral
agencies in a context where ODA is becoming less popular (and policy conditionality
may be less effective). The role of traditional donors is changing and their focus is
likely to shift as well.
6
Greenhill, R., Prizzon, A. & Rogerson, A. (2013) The age of choice: developing countries in the new aid
landscape. London: Overseas Development Institute
EU development cooperation.
Where have we got to? What's next? 11
44. As far as the challenges to the aid effectiveness agenda are concerned, ownership and
alignment are still the main priority, while fragmentation does not seem to pose
problems. This makes non-DAC donors quite popular given their focus on
infrastructure development (which is the backbone of partner countries’ strategies).
Speed of delivery is a common objective and priority is often given to donors (often
non-DAC donors) that can disburse funds relatively quicker, even if this is at a higher
price.
45. As far as climate finance is concerned, the presence of a concrete strategy is the main
condition for countries intending to access climate funds. Climate finance is one of the
areas with the greatest opportunity for economic transformation in developing
countries. The private sector is well positioned to make a considerable contribution
through direct investment and public private partnerships. There is a considerable
amount of private resources available, a vast investment capacity and a strong business
case for low carbon investment. However, this is also an area of huge challenges,
unfulfilled promises and disappointment.
2.2 Rethinking the architecture of development finance
46. The trends identified have implications for the architecture of development finance,
which appears anachronistic.
47. First, the divide between public and private financing is no longer robust.
Contemporary development finance institutions need to provide credit lines to
financial institutions, take equity stakes in public and private equity, provide finance to
small and medium enterprises (SMEs), sponsor entrepreneurship and provide venture
capital. The European Bank for Reconstruction and Development is one institution
that does this in an EU context.
48. Second, frequent shocks have made growth levels and development progress quite
fragile. Financial and climate volatility is very high, which makes capital flows
extremely unpredictable. So, despite the benefits of private flows, their reversibility
can cause economic volatility and market fluctuations. Even foreign direct investment
(FDI), which now comprises a larger share of capital flows, is very volatile. Therefore,
reliance on countries’ own resources and on public funds from abroad (including
development banks) is as important as ever.
49. In addition, good shock architecture is necessary to tackle a range of external shocks –
financial, environmental and climate change. The EU, for example, has good response
and shock-absorbing mechanisms (the Fluctuations in Export Earnings (FLEX) and
the Vulnerability FLEX (V-FLEX) mechanisms).
50. Third, and as far as financing the green economy is concerned, there must be clarity
about how much different actors will be doing and where the gaps are. Donor
governments rely increasingly on leveraging private funds, while the private sector
seems to be complicit and reluctant to get involved without requiring very high
guarantees. Where guarantees are given, the public sector takes all the risk if things go
badly, but it should also take additional profits if things go very well.
51. Fourth, while aiming to fill funding gaps, development finance is also often aimed to
deal with public policy and the quality thereof. The model is old-fashioned and while
it aims to provide technically competent advice, it is not always taken into account.
This is due to the fact that it often fails to consider political issues and the political
economy.
EU development cooperation.
Where have we got to? What's next? 12
52. Finally, in this context, the new agenda will depend as much on ideas as it does on
funding, which would make China and India the biggest contributors. Having recently
emerged from their own development experiences, these countries are able to share
their own development example, policy recommendations and interventions.
Therefore, the BRICS’7 advent on the development finance stage would not be solely
focused on the volumes of money provided, but also on the ideas they supply in terms
of different growth models and different weights attached to the public sector.
2.3 Discussion and key conclusions
53. Points raised during the discussion included the following:
 There are diverging opinions on the need to provide aid to countries with




7
large foreign exchange reserves. The argument in favour focuses on the
presence of high poverty rates in these countries, despite their large foreign
exchange reserves. Hence, aid could be justified on the grounds that
countries might not be able to reduce poverty significantly using their own
resources.
Private financial flows are easily reversible, hence they are commonly
considered to carry a high level of risk for the receiving countries. However,
the reversibility of flows is not always a sufficient reason to conclude that
private flows are unreliable. While investors are fickle and may change their
minds, the private sector seeks security and diversity, which makes its
contributions beneficial. This can encourage long-term commitment to
support local capital markets, provided that it is underpinned by global
policy developments.
However, high levels of risks are associated with high volatility, as was the
case with FDI flows to Africa over recent years. Their massive volumes
dropped very quickly by the end of the decade and this trend has proven
very difficult to reverse. There are two further reasons for the volatility of
private flows, namely the post-crisis fall in investment and the risk of
financial crises associated with high volumes of external flows. There is a
difficult trade-off between encouraging private flows and provoking new
crises. Therefore, long-term investment should be encouraged while being
cautious of private finance. While guarantees are necessary means of
reducing risk, returns should also be limited, leaving the public sector in
charge.
Pooling public resources to leverage private investment has the potential to
create exciting prospects for the future. But, of course, there are
complications (as mentioned above), such as the anachronistic nature of
current public-private finance structures, the debt risks associated with
lending to developing countries, the volatility of private flows etc.. While
there have already been considerable efforts on blending and leveraging,
further work is needed in order to make real progress. It will be important to
avoid directing resources to where they are not necessary, or where they can
be replaced with loans (in accordance with the differentiation agenda).
There will continue to be countries and issues which should be a addressed
with a mix of instruments and in order to do this successfully, bureaucratic
hurdles should be overcome (a challenging area for the EU).
Instruments, ideas and technologies available for the new development
finance agenda include: risk sharing facilities, using ODA for a greater
Brazil, Russia, India, China and South Africa
EU development cooperation.
Where have we got to? What's next? 13
leverage (e.g. the Investment Facility as part of the EDF instrument to ACP 8
countries), crowd financing, social economy funds, regional financing for
infrastructure projects, advanced market commitment, output-based aid,
improved public-private partnerships, challenge funds, impact investment,
high carbon tax on air-travel, and improved outcome measures.
54. In conclusion, the trends identified make it urgent to rethink the case for aid. It will be
especially important to focus on the issue of disappearing public-private boundaries
and the need to leverage private sector money. While this is referred to as blending in
Europe, it is in fact a much bigger issue with a broad definitional and methodological
scope. Despite the multitude of ways to leverage private flows, the European system
seems to be making use of only a limited number of such instruments.
55. Meanwhile, developing countries are no longer as interested as before in discussing
ODA and are increasingly focusing their efforts on improving domestic resource
mobilisation and leveraging private sector flows.
8
The African, Caribbean and Pacific group of states
EU development cooperation.
Where have we got to? What's next? 14
3 Managing strategic
partnerships in a multipolar world
56. The dynamics of international relations have been changing as the world becomes
increasingly multipolar. Many of the major challenges faced by countries require
action at a supranational level and therefore rely on some degree of consensus among
international actors. The geometry of partnerships and the coalitions required to
address these challenges vary according to the issues at stake. A background note
prepared for the session is in Appendix 5.
3.1 The need for partnerships in international affairs
57. We are living in a new era of global challenges, global commons and global goods,
and the only way to manage such challenges is to interact more with one another and
with new emerging powers. The world is characterised by a movement away from a
post-western world after 250 years of western domination and industrialised power;
and by the driving role of mankind in the changes to the environment and the Earth
system. These shifts point to the need to ‘reinvent a civilisation’, which will take time.
58. However, there are huge challenges:
 The current political process has been marked by power shifts and struggles

between old and new powers, but also between western countries
themselves. Recent literature describes a world where no one pushes the
agenda forward; Kupchan calls this ‘a no one’s world’9, while Bremmer
talks of ‘a G0 world’10.
A comparison of the enabling factors to organise cooperation processes
indicates that they are more or less the same at the local and global levels,
and across disciplines. These factors include reciprocity, trust,
communication, joint narratives and reputation. In today’s world though, all
are either eroding or inexistent. It is therefore necessary to invest in these
enablers and reflect on strategies and initiatives toward the management of
the global commons.
9
Kupchan, C.A. (2012) No One's World: The West, the Rising Rest, and the Coming Global Turn, Oxford: Oxford
University Press.
10
Bremmer, I (2012) Every Nation for Itself: Winners and Losers in a G-Zero World, London: Penguin Books Ltd.
EU development cooperation.
Where have we got to? What's next? 15
3.2 Strategic partnerships for improved global governance
59. Strategic partnerships are emerging features of international politics which present two
challenges for the EU:
1. Europe is expected to fit in a world of more diverse and more assertive powers.
How should it adapt to a new era in international relations?
2. Does the EU have the credentials to qualify as a strategic partner among larger
actors like China or India?
60. Strategic partnerships can be defined as those relationships that help to accompany
power shifts toward a positive-sum world as opposed to a zero-sum world. They
should lead to a more cooperative way of interacting. In this sense, the debate over
whether one should only partner with like-minded actors, and whether the emphasis
should be on interests rather than values, is somewhat misleading. The lack of suitable
engagement with these partners will over time threaten not only European economic
interests, free trade and mutual investments, but also European values.
61. However, if the world is heading towards an aggressive multipolar environment,
strategic partnerships are not guaranteed to work as they are only part of the solution
and do not offer a ‘quick fix’. On the other hand, strategic partnerships can contribute
to establishing a cooperative multipolar world as they encourage dialogue and
engagement, and the creation of shared meaning, knowledge and narratives. It is
therefore important to reflect on the costs of non-engagement with strategic partners.
62. There is a distinction to be made between ‘partnerships of choice’ – Canada, the USA,
Japan – and ‘partnerships of necessity’ that are critical to long-term interests and
values. A key feature of strategic partnerships is that they are supposed to be long-term
investments, and thus should be seen as confidence-building instruments. Trust is a
fundamental enabler of cooperation, but it is a very scarce political resource. Some
partners are particularly interesting as potential bridge builders, or countries that
interface between different communities of countries.
63. Some critics are of the opinion that strategic partnerships are detracting from the
traditional focus on multilateralism. Others suggest that from the EU perspective, it is
important to look at these partnerships as a stepping-stone to enabling cooperation in
multilateral fora. Multilateral structures work if there is a certain understanding and
workable relationship between the biggest stakeholders. Up until 10 or 20 years ago,
the main stakeholders were the USA and the EU. The bilateral dimension of
multilateral cooperation was taken for granted and embedded in the way things were
done. Today, we are moving towards a world where multilateral cooperation is based
on the convergence or the divergence of a much wider and more diverse range of
players. Hence, bilateral engagement is potentially a stepping-stone toward
multilateral cooperation.
3.3 The right partnerships for the EU used in the right way?
64. The EU is an unusual actor on the international stage given it is neither a state nor an
international organisation; it is also an emerging player in the field, and as such has
been gradually expanding its foreign policy instruments. Recently, this has taken the
form of strategic partnerships with 10 countries. While long established relationships
with Canada, Japan and the USA have existed for some time, the EU only set up
strategic partnerships with Brazil, China, India, Mexico, Russia, South Africa and
South Korea over the past decade.
EU development cooperation.
Where have we got to? What's next? 16
65. The EU’s 10 strategic partners comprise big and small countries, western and nonwestern countries, the BRICS, countries with whom the EU is close to in terms of
values and others with whom it is not. Having strategic partnerships with such diverse
actors raises the question of how strategic and how partnership-focused the
relationship really is. What is the EU trying to do with those partnerships and is it
achieving it?
66. To be specific, the concept of partnership raises critical questions for the EU:
 Is the strategic partnership the input or the output; is it the ambition or the
starting point?
 What defines a partnership as strategic? The EU creates labels that it has

difficulty getting rid of. As soon as an actor has a strategic partnership with
Europe, there is no chance of it ending in the future as the diplomatic
damage would be too great.
How many strategic partnerships does the EU need to be effective in foreign
policy? Should it have a strategic partnership with all of the G20 countries?
What is the right number, bearing in mind that it is impossible to be taken
off the strategic partners’ list?
 The EU has strategic partnerships with organisations such as NATO or the
African Union (AU), but why not other groups like the Economic
Community of West African States (ECOWAS) or the UN? Does having
strategic relations with organisations reduce the value of bilateral strategic
partnerships?
67. Many of the EU’s strategic partnerships are not strategic per se, but very much
focused on economics. With the BRICS, the emphasis is on the EU as a trade bloc and
an economic partner. However, if a strategic partnership is one-dimensional for the
counterpart, how strategic can it really be? Ideally, the EU should have a multidimensional dialogue with its partners, crossing over into questions of development,
human rights, security, governance etc. But partners do not necessarily want to talk
about these issues with Europeans and therefore the EU should continuously ask itself
whether it is talking to the right actors about the right issues. If the EU wants to
strengthen its strategic partnerships, it needs to move beyond trade and put issues that
are important from a European perspective high on the agenda.
68. Handling these partnerships at the EU level may make more sense than through other
fora, such as NATO or the UN, because it has the appropriate toolbox across policy
areas. However, the EU’s partnerships lack both input and output legitimacy: the
partnerships are often credited with modest outputs, and lack ‘input legitimacy’
because most of the EU’s strategic partners are not like-minded. The range of 10
countries is very diverse, not only from a normative standpoint, but also in terms of
sheer importance and direct impact on EU interests. To ensure successful engagement
with these actors, the EU needs to approach them with adequate resources and focus,
as these strategic partnerships will only succeed if the EU is the driving force behind
them.
69. In December, the European Council will consider the effectiveness of the Common
Security and Defence Policy. A revision of the European Security Strategy has also
been called for. As part of these reviews, the EU should clarify and prioritise its
relations with partners.
3.4 Discussion and key conclusions
70. Points raised during the conference included:
EU development cooperation.
Where have we got to? What's next? 17
 Western like-mindedness is taken for granted, but it has been constructed




over centuries.
Why do we need to base things on shared values instead of focusing on why
we need to cooperate in order to reach certain outputs?
What is the role of the state in strategic partnerships? For example, more
than half of trade and investment is conducted by transnational
corporations.
Has the ACP-EU partnership become obsolete? Is it of value to Europeans?
Although the partnership is perceived as rather hollow, it has some
particularly important principles and elements, including the legally binding
mechanism, the joint institutions and parliamentary assemblies, which could
serve as a model for other partnerships.
The OECD and EU form of cooperation is about joint learning, joint results
and peer review. For the BRICS, it is about mutual respect and noninterference. The challenge is how to use different instruments to build joint
knowledge and joint narratives on what the changes are and what
cooperation can do about them.
71. In conclusion, participants agreed that the EU needs to have a clearer understanding of
what it aims to achieve with its bilateral strategic partnerships and how to ensure it
produces the desired results. While some see in these partnerships a movement away
from multilateralism, others view it as a means to build relationships that will generate
a collaborative environment in multilateral fora.
72. Designing an overarching framework for strategic partnerships could be helpful in
addressing the lack of clarity. The following three themes were put forward as possible
focus areas for such a framework: security, sustainability, and minimum social
cohesion.
73. In addition, it seems that the EU is powerful when it speaks with one voice. In
development policy, joint programming makes Europe a bigger donor in the face of
other large donors. Trade and climate change are other examples.
74. The EU's strategic partnerships with non-state actors also have potential. For instance,
the EU is unique in its partnerships with regional organisations, as no other state, in or
out of the EU, is capable of leveraging relations with such actors. These regional
partnerships tend to be more multidimensional in scope and therefore offer
opportunities for enhanced cooperation in a variety of sectors, such as development.
75. There was broad agreement among the conference participants on the need for
enabling factors such as reciprocity, trust, communication or joint narratives to be
enhanced in order to prevent tensions and promote cooperation among international
actors.
EU development cooperation.
Where have we got to? What's next? 18
4 Capability and capacity
in future EU development
cooperation
76. The need for development agencies to re-invent or re-engineer themselves was a
recurrent theme at the conference. A stress test indicates that the EU is close to the red
zone, so that this agenda is highly relevant to European institutions. A background
note prepared for the session is in Appendix 6.
4.1 How prepared are development agencies for the changing
world?
77. A recent study, Horizon 2025,11 uses a stress test to assess how exposed and how
resilient development agencies are in a changing world. The study suggests that there
are three motivations or purposes for development action. Each of these motivations is
affected by a disruptor that is causing change.
 Altruism: improved social welfare.
- Disruptor: new models coming from the private sector, technology and
philanthropy to improve social welfare.
 Bilateralism: mutual interest in growth, trade and investment.
- Disruptor: South-South cooperation which could potentially shift the
focus of OECD countries.
 Multilateralism: collective interest (shared global commons).
- Disruptor: In climate change finance, for instance, if an agency is resolute
that mitigating climate change is a top priority, it will invest in different
countries than if it focused on poverty eradication.
78. A traffic light index ranks the exposure of development agencies in terms of the
declining need, by country or sector, for their operations, measured by the current
level of net disbursements (Figure 6). The index shows that if a development agency’s
portfolio is focused on MICs, it may have a problem in the future as citizens and
political forces are likely to question the legitimacy of continuing to give large
amounts of aid to those countries. If a development agency is geared towards
delivering social services, it may be exposed for not undertaking other activities, as
well as competing with other actors that are better at social service delivery. Agencies
11
Kharas, H. & Rogerson, A. (2012) Horizon 2025: Creative destruction in the aid industry, London: Overseas
Development Institute
EU development cooperation.
Where have we got to? What's next? 19
are ‘protected’, to some extent, if they finance infrastructure packages, global public
goods and climate change mitigation and adaptation.
Figure 6: A traffic light approach to risk of irrelevance
Source: Kharas & Rogerson (2012)
79. The index assesses what agencies do and not how they do it – it is not a judgement of
the quality of aid. The least exposed agencies (in the green zone) are those that are
engaged most heavily in the provision of global public goods and activities focused on
the high poverty gap and fragile countries. Highly exposed agencies are those focusing
heavily on social welfare programmes, as opposed to growth or global goods, and
MICs. Bilateral donors in the red zone could become more relevant by shifting their
funds through higher ranking multilateral organisations. Note that the EU does not fare
well in the stress test, coming 10th from the bottom out of 34.
4.2 What capabilities and capacity will the EU need in the future?
80.
The previous discussion suggests that the EU will need to be skilled at:
 using development assistance strategically;
 working across sectors e.g. MDGs/Sustainable Development Goals (SDGs);
 promoting policy coherence for development internally (transversal and
overview skills, ability to work across specialist areas and understanding
EU development cooperation.
Where have we got to? What's next? 20
how different policy areas inter-relate, diplomatic and negotiating skills,
and political and communication skills);speaking with one voice externally
(political will/internal consensus-building capacities and international
dialogue processes to build and maintain coalitions).
81. With regard to the existing capacity within the European Commission, the following
features can be highlighted: the process of devolution to delegations has improved aid
spending, and the evaluation system is thought to be solid.
82. Official figures from the EEAS show that few staff work in development, but it also
has extensive foreign policy skills which are key in development cooperation. Also,
there are a much larger number of seconded national experts in the EEAS, compared
to the Directorate-General for Development and Cooperation (DG DEVCO).
83. On the other hand, the lack of specific expertise in certain sectors, especially policy
dialogue, public management and health and education, remains; the Member States
do not regard development specific knowledge as a comparative advantage of the EU
institutions; and, there is a high vacancy rate and turnover of contract staff. Official
figures from the DG DEVCO show that nearly half of the staff is contractual agents.
84. Given that staff numbers will decrease in the imminent future, what is needed is a
more far-reaching consensus on a division of labour that is practical and has a clear
strategic approach across the board. Joint EU action will inevitably reduce national
visibility, but Member States may have little choice if they want to compete
effectively. If they do choose to work more closely, this will require strong leadership
so that staff know what is expected of them. Stronger promotional and managements
systems will be needed, as well as more and better data on how different ministries,
agencies and staff work.
85. In the past 12 years, the Commission has gone through two substantive reorganisations
and we should therefore not underestimate the European institutions’ ability to change.
The proportion of contractual staff also allows for flexibility. The use of Seconded
National Experts (SNEs) is another area where Member States could do more and
constitutes an instrument to transfer expertise from the national to the EU level.
4.3 Discussion and key conclusions
86. Points raised during the conference included:
 The new challenges of aid administration are very difficult to face and


respond to, while the need for organisations to improve is growing. More
investment should be made in aid management, while expanding expertise
to new areas. Given that the pool of resources and personnel will be limited
in the future, important political choices will have to be made. Facing all
these challenges on a global scale, more public governance and state
involvement will be necessary.
There will be a case for aid agencies administering ODA to LICs, at least in
the medium term. This implies that although development agencies should
invest more on skills relevant to address global challenge still need
specialist skills in traditional fields.
As a result of the financial crisis, some Member States have made cuts in
their development administrations; while in others, like the Netherlands, the
administration has become more bilateral-focused, prioritising national
interests over altruism.
EU development cooperation.
Where have we got to? What's next? 21
 The EU-1212 countries have had similar debates on how to use development


cooperation: as an instrument of foreign affairs or not; oriented towards
altruism or growth and investment and the promotion of mutual interests;
and whether to opt for bilateral or multilateral aid. Yet, in the EU-12, the
question remains as to whether money and energy should be devoted to
international development. The EU-12 have much lower capacity than
France, Germany or the UK, and as such try to coordinate their views and
develop common positions.
There is a department for global issues within the EEAS that employs
around 30 people. This does not reflect an ambitious agenda. In the
development cooperation division, a particular effort has been made to have
a high presence of SNEs. The advantage is that ‘they are people who can
shout and be shouted at [by] their national administration, because they are
from the same system’, which establishes trust and confidence that it will
not create an institutional clash.
Germany is attempting to revamp its development cooperation in response
to the changing landscape and increased questioning of its legitimacy. It is
considering two options: a ministry for global issues, based on cooperation
rather than aid and covering issues such as food security, technology,
poverty, resource efficiency/management and agriculture; or a strengthening
of international departments in all the relevant sectoral ministries.
87. In conclusion, it seems clear that, as the development agenda changes, the relevance of
development agencies will be increasingly challenged in the coming decades. As a
result, development actors will need to adapt the type of work they do and the
resources they have available to do it. Future trends suggest that development agencies
should steer their engagement away from social welfare programmes and MICs toward
a focus on the provision of global public goods, and to the high poverty gap and fragile
countries.
88. Engaging in these new areas will require some adjustments to existing capacities. For
example, there should be more investment in skills that promote collective action, or in
communications tools that provide results that can be presented to the public as the
legitimacy of development cooperation comes under closer scrutiny. Other areas for
improvement include sharing knowledge and experience across institutions within
countries, but also at the European level.
89. Some positive examples from the EEAS were discussed and showed that the
ingredients of success include an ability to mobilise relevant actors and expertise
rapidly across institutions (e.g. discussions held on the security situation in northern
Nigeria) and a political will and commitment at the highest level (such as the KosovoSerbia dialogue).
90. Finally, future changes will intensify the debate on whether development is an
instrument of foreign affairs, or a separate policy area. In either case, the institutional
architecture will require stronger capacities to tackle future challenges that affect the
development of people and countries.
12
EU-12 Member States: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Romania, Slovakia, Slovenia.
EU development cooperation.
Where have we got to? What's next? 22
5 From ideas to practice
91. At the end of the Conference, seven conclusions were drawn.
92. First, there was something of a divide at the conference between those who might be
described as starting from an a priori European position, and those who were more
transactional in their approach. The first group tended to emphasise shared interests
and common approaches as a starting point; the latter group to talk more about
recognising divergent interests, institutional choices and the need to make the case.
The two groups often came together. They agreed that working through the EU offered
economies of scale and greater weight internationally – and there were many areas,
like international trade policy, which were inevitably European as a consequence of
the internal market. Nevertheless, participants were warned not to adopt the Mt
Everest option: always to think first about the EU, ‘because it was there’.
93. Second, it was not difficult to sketch out a vision of future EU development
cooperation, different from the current version. The values would be the same,
inspired by ideas of social justice. However, although there would continue to be
emphasis on service delivery in poor countries, more emphasis would be placed on
delivering global public goods, including sustainability and peace. A greater variety of
instruments would come into play (including trade, new forms of finance, climate
rules, and foreign policy); and partnerships would be needed with a greater range of
countries, including of course the BRICS. In this context, two key ideas for post-2015
came into play, both advocated by the UNHLP on post-2015: first, the idea of unifying
poverty and sustainable development goals into a single framework; second, a
universal approach, applying to both developed and developing countries. Could a
strong, positive vision, rights-based and relevant to all, not be used as a vehicle to
garner support for development, and even perhaps help re-connect the EU with its
citizens? Certainly, re-engagement with citizens was a high priority.
94. Third, it was also quite easy to imagine what the development cooperation agency of
the future would need to look like, and what its place in Government should be –
whether nationally or at EU level. There would need to be a wide range of skills
available, on a wide range of topics, including those related to brokering global deals
and managing partnerships with different kinds of countries. The ability to manage
relationships and delivery mechanisms across Government would be essential. This
would certainly not be an ‘aid’ ministry, and it might not even be a separate ministry at
all. It was interesting to learn at the conference that some countries had already or
were thinking of creating new ministries, sometimes called ‘globalisation’ or ‘global
issues’, incorporating aid, trade, and sometimes climate, alongside foreign policy.
Links to macro-economic policy were also essential. The main issue, though, was
about competencies. As one donor representative remarked: ‘we are terrified by the
extent and speed of change that will be needed in our institution’. Participants noted
that the EU was on the edge of the red zone in the Kharas/Rogerson stress test of aid
agencies’ readiness for the future.
EU development cooperation.
Where have we got to? What's next? 23
95. Fourth, this kind of agenda was certainly non-trivial as far as the EU was concerned.
The basic building blocks might be in place, including the creation of the EEAS, with
the mandate to ensure policy coherence across thematic areas. However, the silos were
both strong and well-cemented, both in the Commission and the Parliament. Examples
of successful networking and joined-up action could be found (Somali piracy was
often cited), but remained exceptional. Many proposals could be made to foster a new
approach: deputies to the High Representative for External Affairs, a more explicit
hierarchy
among
external
Commissioners,
led
by
the
High
Representative/Commission Vice-President, new cadres of professional specialists,
perhaps a different way of organising funding, certainly a more integrated approach by
the committees of the European Parliament.
96. However, fifth, and again to quote a participant, ‘no-one should underestimate the
depth and strength of vested interests opposing change in our institutions’ – nationally
and perhaps especially at EU level. A possible outcome from next year’s elections and
Commission process was a new vision and new capacity to implement, with strong
political leadership, greatly increased capacity to deliver cross-sectorally, and
improved parliamentary accountability, all backed up by high levels of public support.
More likely was continued but probably slow evolution, marked by continual and
messy debate about the limits of EU competence and the internal arrangements of EU
development cooperation.
97. Sixth, then, an important question would be about how to incentivise and manage
change. Statements of purpose might help, especially if articulated by those with the
capacity to set agendas. However, collective action theory suggested that other
elements would be needed, including trust-building measures and the deployment of
incentives. Finance was probably key. Having a seven-year perspective for the EU
budget and the EDF provided predictability for EU planners, but did it also reduce
their responsiveness to signals from stakeholders? There was also a case for building
on areas where the EU had legal competence, for example trade. Another option was
to choose one high profile topic, like building a green economy.
98. Finally, there was an important role for consensus-building and policy engagement
across national boundaries – by policy-makers, but also by parliamentarians and
NGOs. This was exactly the purpose for which the EU Change-makers group had been
established. New ways of working needed to be found, however. Policy-makers and
politicians were busy. Attendance at meetings was costly. Participation in e-fora or
discussions was unlikely. Probably, there would need to be a core steering group and
then a variety of ‘instruments’ to reach different actors. The European Think-Tanks
Group would be a key actor in developing new narratives, but also in supporting
disparate policy processes in the Member States of the EU.
EU development cooperation.
Where have we got to? What's next? 24
Appendix 1
Conference programme
Monday, 24 June
11.15
Welcome
Kevin Watkins, Director, Overseas
Development Institute
11.30 – 13.00
Overview
Simon Maxwell, Senior Research
Associate, Overseas Development
Institute
Mikaela Gavas, Research Associate,
Overseas Development Institute
Erik Solheim, Chair, Development
Assistance Committee, OECD
Respondent:
Gustavo Martin Prada, Director of the
‘EU Development Policy’ Directorate,
DG DEVCO, European Commission
13.00 – 14.00
Lunch
14.00 – 15.30
The challenge of a
new development
agenda
Michael Anderson, Director General,
Policy and Global Issues Programmes,
the UK Prime Minister’s Special Envoy
on UN Development Goals
Andrew Norton, Director of Research,
Overseas Development Institute
Bernice Lee, Research Director for
Energy, Environment and Resource
Governance, Chatham House
Respondent:
Uta Böllhoff, Director General, Europe,
Middle East, Asia and Multilateral Policy,
German Federal Ministry for Economic
Cooperation and Development (BMZ)
15.30 – 16.00
Tea and coffee
16.00 – 17.30
Reengineering
development
st
finance in the 21
Annalisa Prizzon, Research Officer,
Overseas Development Institute
Stephany Griffith-Jones, Financial
EU development cooperation.
Where have we got to? What's next? 25
Century
Markets Program Director, Initiative for
Policy Dialogue, Columbia University
Simon Commander, Managing Partner,
Altura Partners
Richard Gledhill, Partner,
PricewaterhouseCoopers
Respondents:
Tamsyn Barton, Director-General,
European Investment Bank
19.30
Dinner
Guest speaker:
Charles Grant, Director, Centre for
European Reform
Tuesday, 25 June
09.00 – 10.30
Managing strategic
partnerships in a
multi-polar world
Dirk Messner, Director, German
Development Institute/Deutsches Institut
für Entwicklungspolitik (DIE) (video
broadcast)
Giovanni Grevi, Deputy Director,
Fundación para las Relaciones
Internacionales y el Diálogo Exterior
(FRIDE)
Rem Korteweg, Senior Research
Fellow, Centre for European Reform
Respondent:
Felix Fernandez-Shaw, Head of the
Development Cooperation Coordination
Division, European External Action
Service (EEAS)
10.30 – 11.00
Tea and coffee
11.00 – 12.30
Capability and
capacity in future
EU development
cooperation
Andrew Rogerson, Senior Research
Associate, Overseas Development
Institute
James Mackie, Senior Advisor,
European Centre for Development
Policy Management (ECDPM)
Respondent:
Timo Olkkonen, Director of General
Development Policy and Planning,
Finnish Ministry of Foreign Affairs
12.30 – 13.30
Lunch
13.30 – 15.00
Conclusions and
next steps
Baroness Glenys Kinnock, Member of
the UK House of Lords
Louka Katseli, Professor of Economics,
University of Athens (former Greek
Minister for Labour and former Head of
the OECD Development Centre)
Olivier Consolo, Director, CONCORD
EU development cooperation.
Where have we got to? What's next? 26
Appendix 2
List of participants
Name
Title
Affiliation
Speakers, panellists and respondents
Kevin Watkins
Director
Erik Solheim
Chair
Simon Maxwell
Senior Research Associate
Mikaela Gavas
Research Associate
Gustavo Martín Prada
Director of the "EU Development
Policy" Directorate
Michael Anderson
Bernice Lee
Andy Norton
Uta Böllhoff
Simon Commander
Stephany GriffithJones
Annalisa Prizzon
Director General, Policy and Global
Programmes, the UK Prime Minister's
Special Envoy on UN Development
Goals
Research Director: Energy,
Environment and Resources
Director of Research
Director General, Europe, Middle East,
Asia and Multilateral Policy
Charles Grant
Managing Partner
Financial Markets Program Director,
Initiative for Policy Dialogue
Research Officer
Partner - Sustainability and Climate
Change Practice
Director General Lending operations
outside the EU & Candidate countries
Director
Rem Korteweg
Senior Research Fellow
Giovanni Grevi
Deputy Director
Dirk Messner
Director
Felix FernandezShaw
Head of EEAS VI B2 - Development
Cooperation Coordination Division
Jon Williams
Tamsyn Barton
Overseas Development Institute
OECD Development Assistance
Committee (DAC)
Overseas Development Institute
Overseas Development Institute
Directorate General for
Development and Cooperation –
EuropeAid, European
Commission
UK Department for International
Development (DFID)
Chatham House
Overseas Development Institute
German Federal Ministry for
Economic Cooperation and
Development
Altura Partners
Columbia University
Overseas Development Institute
PwC
European Investment Bank
Centre for European Reform
Centre for European Reform
La Fundación para las
Relaciones Internacionales y el
Diálogo Exterior (FRIDE)
Deutsche Institut für
Entwicklungspolitik (DIE)
European External Action
Service (EEAS)
EU development cooperation.
Where have we got to? What's next? 27
Name
Title
James Mackie
Senior Adviser EU Development Policy
Andrew Rogerson
Director of General Development Policy
and Planning
Senior Research Associate
Olivier Consolo
Director
Glenys Kinnock
Baroness
Professor of Economics (former Greek
Minister for Labour and former Head of
the OECD Development Centre)
Timo Olkkonen
Louka Katseli
Delegates
Alexander
Woollcombe
Head of UK and EU External Relations
Affiliation
The European Centre for
Development Policy
Management (ECDPM)
Finnish Ministry of Foreign
Affairs
Overseas Development Institute
CONCORD Europe – the
European NGO Confederation
for relief and development
House of Lords
University of Athens
Bill & Melinda Gates Foundation
The European Centre for
Development Policy
Management (ECDPM)
UK Department for International
Development (DFID)
BOND
UK Department for International
Development (DFID)
La Fundación para las
Relaciones Internacionales y el
Diálogo Exterior (FRIDE)
UK Department for International
Development (DFID)
Andrew Sheriff
Head of Programme: European
External Action
Anthony Smith
Director, International Relations
Ben Jackson
Chief Executive
Carol Jenkins
Head of EU Delivery & Results Team
Clare Castillejo
Senior Researcher
Dave Smith
Head, UK in Europe Team
Edward Hedger
Head of Programme: Centre for Aid and
Public Expenditure (CAPE)
Emma Green
Head of Policy, Europe Department
Germana Canzi
EU Policy Adviser
UK Department for International
Development (DFID)
BOND
Helen Morton
Head of Global Advocacy
Practical Action
Helen O'Connell
Independent Consultant
Imme Scholz
Deputy Director
Mark Furness
Researcher: Department Bi- and
multilateral cooperation
Melinda Simmons
Head of Europe Department
Melissa Julian
Communications Manager
Mira Markova
EU Researcher
Deutsche Institut für
Entwicklungspolitik (DIE)
Deutsche Institut für
Entwicklungspolitik (DIE)
UK Department for International
Development (DFID)
The European Centre for
Development Policy
Management (ECDPM)
Overseas Development Institute
Raphaelle Faure
EU Researcher
Overseas Development Institute
Stephen Tindale
Associate Fellow
Researcher: Department Bi- and
multilateral cooperation
Director of Development Cooperation
and Humanitarian Aid
Centre for European Reform
Deutsche Institut für
Entwicklungspolitik (DIE)
Svea Koch
Zuzana Hlavickova
Overseas Development Institute
Czech Ministry of Foreign Affairs
EU development cooperation.
Where have we got to? What's next? 28
Appendix 3
Background note – Session 1: The challenges of a new
development agenda (prepared by Mira Markova)
Pressure continues to mount on both global economic and environmental systems. Rising
global temperatures and climate change are testing environmental resilience, while fiscal
and monetary policies and the possibility of future shocks are challenging global economic
resilience. Any change on one front is certain to affect the other.
Figure 1: Top 5 global risks by likelihood and impact
Source: World Economic Forum, Global Risks 2013
EU development cooperation.
Where have we got to? What's next? 29
Development cooperation has been continuously evolving over the past decades and there is
a constant need to adapt to new actors, contexts and issues. Poverty is increasingly
becoming a middle-income and fragile state phenomenon. Poor countries are more and
more seeking to reduce their aid dependency. Meanwhile, the development community is
diversifying as middle-income countries become donors themselves and new private actors
enter the aid scene. These changes are rearranging the structure of development cooperation
and finance, suggesting that a number of challenges lay ahead.
Figure 2: MDG progress
Percentage, 100% = goal attained
EU development cooperation.
Where have we got to? What's next? 30
Figure 3: Proportion of the world’s poor living in middle-income countries and fragile and
conflict affected states (FCAS) has risen
Poverty eradication
Global poverty has significantly declined over the past few decades due to economic growth
and demographic changes, while social indicators, such as health and education, have
steadily improved. There has been substantial progress towards meeting most MDG targets
at a global level. Results, however, have not been equally distributed within and across
countries and regions - the question of how to effectively address deep-rooted forms of
deprivation will therefore continue to be a valid one.
Environmental sustainability
Given the impact of the projected trends in CO2 emissions, global average temperatures
could increase by about 3.5C by 2100 Climate Action Tracker, 2012 IEA, 2011) - well
above the 20C of global warming commonly considered the threshold for triggering
dangerous climate change and consequences. Moreover, the 20C scenario is now considered
unobtainable, even if there is rapid decarbonisation and a green growth revolution (though it
remains a target for political negotiations). Climate change is already among the priorities
on the international agenda and is likely to have a fundamental influence on future
development cooperation.
During the Rio+20 Summit in June 2012, countries signed off on a plan to set new global
sustainability goals, but future progress is likely to face big obstacles. On the one hand,
climate change presents tangible environmental and economic threats; on the other, its
urgency is constantly challenged by the more short-term priorities of job creation, growth
and economic stability concerns.
EU development cooperation.
Where have we got to? What's next? 31
Figure 4: Possible impact of global warming on different sectors
Source: World Economic Forum, Global Risks 2013
Peace and security
Security and stability are themselves preconditions for achieving sustainable development
objectives, and it is generally believed that development cooperation can help improve
security, thus creating the necessary conditions for long-term institutional change. However,
making stabilisation efforts a development priority raises concerns about the ‘securitisation’
of development (i.e. development aid being used entirely for security or foreign policy
purposes), which can potentially undermine the legitimacy of humanitarian action.
Countries are often trapped in cycles of violence, which erodes economic opportunities and
results in low levels of human development. According to World Bank estimates, 1.5 billion
people live in countries affected by repeated cycles of violence and conflict (World Bank,
2011). Even though deaths caused by civil war have fallen considerably since the 1980s, a
quarter of the world’s population still lives in conflict-affected countries and over 40
million people have been displaced from their homes.
The geography of wealth
Figure 5: Shares in the world economy, 2010, 2025 and 2050 (in % of world GDP)
Source:
The development cooperation discourse is continuously evolving, corresponding to a
shifting geography of wealth – from the ‘East Asian Tigers’ of the 1980s and 1990s,
through the ‘BRICS’ Brazil, Russia, India, China and South Africa) from the late 1990s, to
the current trend of middle-income countries catching up with OECD countries. Economic
growth rates in sub-Saharan Africa have also shown considerable improvement after
decades of stagnation or decline. Over the past two decades, developing countries were for
the first time growing faster than high-income economies (OECD, 2011). An estimated 83
EU development cooperation.
Where have we got to? What's next? 32
developing countries managed to double OECD per capita growth rates in the 2000s,
compared to only 12 countries in the 1990s.
This general and accelerating trend towards global economic convergence is producing a
major shift in the balance of global economic and political powers: global inequality is
dropping as inter-country inequality is reduced. Country-level inequality is however rising
and is re-emerging as a source of concern.
Issues for discussion
 Does the ‘new’ agenda imply that traditional donor agencies have to be
reconfigured?
 Given the likelihood of future financial crises and natural catastrophes, are
there ways to build resilience in the economic and environmental systems at
the same time?
 Should more or less aid be directed to middle-income countries?
 Apart from the challenges ahead, what opportunities does climate change
action present for future sustainable development?
Further reading
Evans, A. 2010) ‘Aid Effectiveness post-2010: a think piece on ways forward’. London:
Overseas Development Institute.
Elhawary, S., Pantuliano, S. and Foresti, M. 2010) ‘Development, security and transitions:
a meeting series report’. ODI Meeting Series Report. London: Overseas
Development Institute.
Four , ., B nassy- u r , A. and Fontagn , L. 2012) ‘The great shift: macroeconomic
projections for the World Economy at the 2050 Horizon’. CEPII Working Paper.
Paris: Centre d’Etudes Prospectives et d’Informations Internationales.
Hillebrand, E. 2010) ‘Poverty, growth, and inequality over the next 50 years’, Paper
prepared for the Expert Meeting on How to Feed the World in 2050, Food and
Agriculture Organization of the United Nations.
Kharas, H. and Rogerson, A. 2012) ‘Horizon 2025: Creative destruction in the aid
industry’. ODI Research Report. London: Overseas Development Institute.
Kharas, H. 2010) ‘The emerging middle class in developing countries’. OECD Working
Paper 285. Paris: OECD Development Centre.
Melamed, C. 2012) ‘After 2015: contexts, politics and processes for a post-2015 Global
Agreement on Development’. ODI Research Report. London: Overseas
Development Institute.
OECD 2011) ‘Perspectives on Global Development 2012: Social cohesion in a shifting
world’. OECD Report. Paris: OECD.
Rogerson, A., Norton, A. and Maxwell, S. 2012) ‘Inclusive and sustainable development:
challenges, opportunities, policies and partnerships’. ODI Working Paper. London:
Overseas Development Institute.
Sumner, A. 2010) ‘Global poverty and the new bottom billion’. IDS Working Paper.
Brighton: Institute of Development Studies.
World Bank 2011: World Development Report on Conflict Security and Development
World Economic Forum 2013: Global Risks
EU development cooperation.
Where have we got to? What's next? 33
Appendix 4
Background note – Session 2: Reengineering development
finance in the 21st Century (prepared by Mira Markova)
‘Official Development Assistance’ (ODA) is dying…What we are witnessing
is the dilution of an outdated concept – one based on long gone illusions
about the unity, the clarity and the purity of the ‘international community’s’
goals – into a new complex breed of public policies that attempt to confront
the challenges of a globalized world. A triple revolution of objectives, players
and instruments is reshuffling the cards, dynamiting old practices and habits.
The bustling creativity of development finance is precipitating a change of
era: a new phoenix is rising from the ashes of a half-century old policy.
(Severino and Ray, 2009)
A changing pattern of flows
The mixture of development resources is in flux and the future of traditional aid is in
turmoil. This is likely to have a profound effect on the planning of any post-2015 scenarios.
Only a decade ago, development assistance was predominantly supplied by traditional
OECD donors and conformed to an established set of norms. Developing countries now
have access to an increasing variety of resources to finance their development. While
Official Development Assistance (ODA) still plays a catalytic role in low-income and least
developed countries, it is also increasingly challenged by alternative sources of finance such
as Foreign Direct Investment (FDI), remittances and emerging new non-traditional forms of
development finance. The latter fulfil similar purposes and include South-South
Cooperation (SSC), climate finance, philanthropy and other forms of private development
assistance. Both traditional and non-traditional flows have been growing in volume over the
past decade – a trend likely to continue in the future. The development finance agenda is
undergoing a rapid transformation, which is questioning the relevance of ODA and making
it necessary for donors to rethink their strategies.
Greenhill et al (2013) estimate that total development assistance grew from $77.1 billion to
$213.5 billion between 2000 and 2009. In 2000, the ‘non-traditional’ component of these
flows was only $5.3 billion, or 8.1% of the total. By 2009, non-traditional flows had
increased tenfold to $53.3 billion, making up 30.7% of total development assistance.
EU development cooperation.
Where have we got to? What's next? 34
Figure 1: Changing pattern of aid flows
Source: Kharas (ed), 2011
Figure 2: Which financing resources matter? Changing nature of capital flows to sub-Saharan
Africa (USD billion)
Source: Te Velde, 2013 (European Parliament Hearing presentation)
Figure 3: Trends in development assistance flows, for 2000 and 2009 (in billions)
Source: Greenhill et al. 2013
EU development cooperation.
Where have we got to? What's next? 35
Domestic resource mobilisation
Figure 4: Trends in government revenue and ODA in sub-Saharan Africa
35
30
25
20
General
government
revenue (% of
GNI)
ODA (% of
GNI)
15
10
5
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
S
c : A h ’s wn c ns
c
sing IM
nd OECD-DAC database
A more prominent source for development resource mobilisation in the future could come
from developing countries themselves. The high government revenue ratio (government
revenue as a percentage of GNI) in countries in sub-Saharan Africa suggests that
governments have considerable means to promote development. As the global financial
crisis has affected ODA growth, the case for domestic resource mobilisation has become
more prominent, although there is little clarity on how to channel and increase the
contribution of such funds. A large body of empirical work suggests that developing
countries can increase tax revenue to raise development finance, or at least increase the
extent to which taxation is used to finance development.
The distribution and importance of the different development finance flows are highly
uneven across income categories. For MICs tax revenue is significantly higher than ODA,
FDI or remittances, whereas for LICs ODA is close to, or in some years even higher than,
tax revenues. Other sources of development finance were and will continue to be
concentrated in MICs: the level of FDI inflows and remittances to MICs in 2010 was
considerably higher than to LICs and has been increasing at a higher rate (Greenhill and
Prizzon, 2012).
Figures 5 and 6: Domestic and cross-border flows as a share of GDP: LICs vs. MICs
EU development cooperation.
Where have we got to? What's next? 36
Source: Greenhill and Prizzon, 2012
Multilateralism vs. bilateralism
Figure 7: Gross ODA disbursements (2010) (excluding debt relief and contributions from EU
institutions, in constant 2010 prices)
Source: OECD DAC 2012 Report on Multilateral Aid
In 2010, the multilateral system accounted for 40% of gross ODA (an 8% increase in real
terms compared to 2009). Bilateral aid comprised 72% of all ODA: 12% of total ODA
(USD 16.7 billion) was identified as bilateral but was in fact channelled through and
implemented by multilateral agencies.
45% of multi-bi aid is not allocated by country, but is earmarked for a specific region,
theme, and/or sector (e.g. Sub-Saharan Africa, food security, climate change, or education).
Of the 55% that does go to particular countries, the bulk is disbursed to fragile and conflictaffected low-income countries, which means that the multi-bi aid serves as a channel for
donors to reach the poorest and most fragile countries.
EU development cooperation.
Where have we got to? What's next? 37
Figure 8: Total use of the multilateral system, gross ODA disbursements in 2010
Source: OECD DAC 2012 Report on Multilateral Aid
The largest volume of multi-bi flows is channelled through UN Funds and Programmes and
the World Bank Group. Since it only recently started to accept earmarked funds, the EU has
a relatively small share of multi-bi flows but it channels the largest volume of multilateral
development aid.
However, as the Member States’ ODA levels grow in an attempt to reach the 0.7% target,
the respective share channelled and managed through the EU will decline – this is because
the individual contributions by Member States are fixed for the following seven-year term
by the MFF and the EDF agreements.
Figure 9: A declining footprint of the European Union
DAC EU ODA/GNI Average %
0.41%
0.37%
0.40%
0.42%
0.44%
Share of ODA managed by EU Institutions
0.44%
0.46%
0.42%
28%*
19%
18%
20%
0.46%
28%*
24%
17%
0.45%
0.70%
20%
18%
19%
12%
2006
actual
2007
actual
2008
actual
2009
actual
2010
actual
2011
actual
2012
actual
2013
forecast
2014
forecast
2015
forecast
…
2020
**The increase in the share of ODA managed by the EU for 2012 and 2013 to 28% is due to an increase
in loans.
Source: Gavas, 2013
EU development cooperation.
Where have we got to? What's next? 38
Figure 10: Gap between 2012 ODA levels and 2015 agreed individual targets of the 27 EU Member
States and direction of change from 2011 to 2012
Issues for discussion
 Is ODA still relevant?
 Does having more choice regarding sources of development finance put
recipient countries in a stronger negotiating position?
 To what extent should donors support the diversification of sources of
development financing?
 Should ODA become exclusively concentrated on countries which cannot
access private development flows?
 How can donors use ODA to leverage other investment flows?
 Is it better to be a big multilateral donor or a small bilateral organisation?
 Is climate finance changing the entire framework of development finance?
Further reading
Evans, A. 2010) ‘Aid Effectiveness post-2010: a think piece on ways forward’. ODI
Working Paper. London: Overseas Development Institute.
ECOSOC 2008) ‘Background study for the Development Cooperation Forum: trends in
South-South and triangular development cooperation’. New York: United Nations.
Gavas, M., Geddes, M., Massa, I. and te Velde, D.W. 2011) ‘EU blending facilities:
implications for future governance options’. European Think-Tanks Group. London:
Overseas Development Institute.
Glennie, . 2011) ‘The role of aid to middle-income countries: A contribution to evolving
EU development policy’. ODI Working Paper 331. London: Overseas Development
Institute.
Greenhill, R., Prizzon, A., Rogerson, A. 2013) ‘The age of choice: How are developing
countries managing the new aid landscape?’ ODI Working Paper 364. London:
Overseas Development Institute.
EU development cooperation.
Where have we got to? What's next? 39
Greenhill, R. and Prizzon, A. 2012) ‘Who foots the bill after 2015? What new trends in
development finance mean for the post-MDGs’. ODI Working Paper 360. London:
Overseas Development Institute.
Griffiths, . 2012) ‘Leveraging private sector finance. How does it work and what are the
risks?’. London: Bretton Woods Project.
Grimm, S. and Zhang, C. 2012) ‘South-South Cooperation and the Millennium
Development Goals (MDGs): Preparing for a post-2015 setting’. Background paper
for the European Report on Development 2013.
Grimm, S., Humphrey, ., Lundsgaarde, E. and de Souza, S. L. . 2009) ‘European
development cooperation to 2020: challenges by new actors in international
development’, EDC 2020 Working Paper 4. Bonn: European Association of
Development Research and Training Institutes.
Kanbur, R. and Sumner, A. 2011) ‘Poor countries or poor people? Development assistance
and the new geography of global poverty’. Vox, November 2011.
Kharas, H. and Rogerson, A. 2012) ‘Horizon 2025: creative destruction in the aid
industry’. ODI Working Paper. London: Overseas Development Institute.
Kindornay, S. 2011) ‘From Aid Effectiveness to Development Effectiveness’. Ottawa: The
North South Institute
Klingebiel, S. 2012) ‘Results-Based Aid (RBA): new aid approaches, limitations and the
application to promote good governance’. Bonn: German Development Institute /
Deutsches Institut für Entwicklungspolitik (DIE).
Kragelund, P. 2011) ‘Back to BASICs? The rejuvenation of non-traditional donors’
development cooperation with Africa’. Development and Change, 42, 585-607.
Markova, M. 2013) ‘Scientific or political: assessing options for the 11th European
Development Fund allocation method’. ODI Working Paper. London: Overseas
Development Institute.
Martins, P. M. G. 2010) ‘A post-2015 development agenda: what role for ODA’. London:
Centre for Development Policy and Research, SOAS.
Núñez Ferrer, . and Behrens, A. 2011) ‘Innovative approaches to EU blending
mechanisms for development finance’. Brussels: Centre for European Policy Studies.
Reality of Aid 2010) ‘South-South Cooperation: a challenge to the aid system’.
City: IBON Books.
uezon
Severino, . and Ray, O. 2009) ‘The End of ODA: death and rebirth of a global public
policy’. CGD Working Paper 167. Washington: Center for Global Development.
Shafik, M. 2011) ‘The future of development finance’. CGD Working Paper 250.
Washington DC: Center for Global Development.
EU development cooperation.
Where have we got to? What's next? 40
Appendix 5
Background note – Session 3: Managing strategic partnerships
in a multi-polar world (prepared by Raphaëlle Faure)
The EU is engaged in numerous partnerships with a variety of actors, ranging from
countries to regional blocs and international organisations. Some of these are characterised
as ‘strategic partnerships’, while others are referred to as ‘joint-partnerships’ or ‘joint
strategies’, for example.
The European Security Strategy of 2003 gives an indication of what constitutes a strategic
partnership: ‘There are few if any problems we can deal with on our own. The threats
described above are common threats, shared with all our closest partners. International
cooperation is a necessity. We need to pursue our objectives both through multilateral
cooperation in international organisations and through partnerships with key actors. […] In
particular we should look to develop strategic partnerships, with Japan, China,
Canada and India as well as with all those who share our goals and values, and are
prepared to act in their support [emphasis added]’.
Between 2003 and 2010, the EU’s bilateral relationships with seven emerging powers –
Brazil, China, India, Mexico, Russia, South Africa and South Korea – were upgraded to
strategic partnerships (although they continue to incorporate an ODA component). In
addition, the EU also has longer established strategic partnerships with Canada, Japan and
the United States. This brings the total of bilateral strategic partnerships to ten countries (the
‘lucky 10’) which all belong to the Group of 20. The recent trend has been to build deeper
relationships with new global players over the past decade; looking forward, other
candidates for future strategic partnerships include: Turkey (although this could prove to be
politically challenging given Turkey’s candidacy to becoming an EU Member State),
Indonesia, Pakistan and Nigeria, along with some countries from the Gulf (Renard, 2012).
Elements of a successful bilateral strategic partnership
Strategic partnerships fulfil three main functions:
 A ‘reflexive’ function, meaning that the EU self-asserts itself as a partner in
the international arena.
 A management function for bilateral relationships, especially in the areas of

trade and economics.
A structural role in enhancing global governance by mobilising bilateral
means to address issues at the international level (Grevi, 2012).
EU framework for bilateral partnerships
The EU celebrates bilateral summits with each of its partners, launches common action
plans and establishes multi-dimensional cooperation at the bilateral, regional and global
levels under each strategic partnership (Gratius, 2011). While most core issues differ across
EU development cooperation.
Where have we got to? What's next? 41
the partnerships, trade and investment seem to be issues of particular importance, as they
feature in all of them.
The choice of countries and the reasons for engaging with them are directly linked to the
interests at stake and are not the result of an overarching foreign policy strategy.
Overview of the EU's strategic partnerships (SPs)
Bilateral
Core issues
Aid
Brazil
(2007)
Trade (10th partner),
environment, energy
Yes
Canada
(no official
SP
declaration)
China
(2003)
India
(2008)
Japan (no
declaration)
Mexico
(2009)
Russia
(2009)
South
Africa
(2006)
South
Korea
(2010)
United
States
(1990)
All-inclusive, focus on
values, global peace,
environment, energy,
trade (11th partner) and
investment
Trade (2nd partner),
investment, human
rights
Trade (8th partner),
investment, security
Trade (6th partner),
investment,
development, peace
Trade (19th partner),
investment,
development, (public
security)
Trade (3rd partner),
energy
Development, trade
(13th partner), regional
peace
Trade (9th partner),
development,
democracy
All-inclusive (1st trade
partner)
FTA
Negotiations
Mercosur since
1999
Nature of SP
Limited, value and
interests based
asymmetric SP
No
Negotiations
since 2009
All-inclusive, likeminded SP
Yes
No (PCA)
Yes
Negotiations
since 2006
No
No (in
consideration)
Limited, like
minded SP
Yes
Yes (2000)
Limited, like
minded SP
Yes
No (PCA)
Yes
Yes (2008)
Yes
Yes (2010)
No
Limited, interest
based asymmetric
SP
Limited, value and
interest based
asymmetric SP
Limited, interest
based SP
Limited,
development
focused SP
Limited, likeminded SP
Imminent launch
of negotiations for
Like-minded,
a comprehensive value and interests
trade and
based on
investment
asymmetric SP
agreement
Source: Gratius (2011) based on EU official documents.
Note: PCA = Partnership and Cooperation Agreement
To date, the seven most recent partners still receive aid from the EU. However, as a result of
the EU’s policy of differentiation, these countries will no longer be eligible to receive EU
bilateral aid from 2014.
EU development cooperation.
Where have we got to? What's next? 42
The Partnership Instrument
The Partnership Instrument will replace the ‘financing instrument for cooperation with
industrialised and other high income countries and territories’ (ICI), which expires at the
end of 2013. Therefore a new financial instrument is needed to replace it. The
Partnership Instrument will allow the EU to pursue agendas beyond development
cooperation with global players, but also to defend core EU interests with any other
partner country, as the need arises. It could also underpin new relationships with
countries graduating from bilateral development assistance.
Its three specific objectives are to:
(a) implement the international dimension of the ‘Europe 2020’ strategy by supporting
EU bilateral, regional and interregional cooperation partnership strategies, by promoting
policy dialogues and by developing collective approaches and responses to challenges of
global concern, such as energy security, climate change and environment;
(b) improve market access and developing trade, investment and business opportunities
for European companies, in particular SMEs, by means of economic partnerships and
business and regulatory cooperation;
(c) enhance widespread understanding and visibility of the Union and its role on the
world scene by means of public diplomacy, education/academic cooperation and
outreach activities to promote the Union’s values and interests.
Source :
http://ec.europa.eu/europeaid/how/finance/documents/prop_reg_partnership_instrument_en.pdf
Other EU strategic relationships
Regional partnerships
The EU is engaged in a number of strategic relationships with regional blocs in addition to
its 10 bilateral strategic partnerships. Below are three examples of such strategic
relationships.
 The Asia-Europe Meeting (ASEM), created in 1996, is an informal process of


dialogue and cooperation bringing the 27 EU Member States, the European
Commission, Norway and Switzerland together with 20 Asian countries and the
Association of Southeast Asian Nations (ASEAN) Secretariat. The ASEM
dialogue addresses political, economic and cultural issues, with the objective of
strengthening the relationship between the two regions. The summits reaffirm the
different areas of collaboration between the two regions, many of which cover
development cooperation issues.
The EU-Community of Latin American and Caribbean States (CELAC)
strategic partnership, created in 2010, held its latest summit in January 2013.
The partners issued a two-year action plan on areas including: science, research,
innovation and technology; sustainable development; environment; climate
change; biodiversity; energy; regional integration and interconnectivity to
promote social inclusion cohesion; migration; education and employment to
promote social inclusion and cohesion; gender and investments and
entrepreneurship for sustainable development.
The relationship between the EU and Africa is governed by two frameworks:
the African, Caribbean and Pacific (ACP), enshrined in the 1975 Lomé
Convention, updated in 2000 by the Cotonou Agreement; and more recently,
the Joint-EU Africa Strategy (JAES), conceived at the 2007 EU-Africa summit
in Lisbon, which reflects the pan-African dimension. The strategy focuses on
eight areas of collaboration, including: peace and security; democratic
governance and human rights; regional economic integration, trade and
infrastructure; Millennium Development Goals; climate change; and migration,
mobility and employment.
EU development cooperation.
Where have we got to? What's next? 43
Institutional partnerships
To ensure greater collaboration in common areas of interest, the EU has also set up a series
of strategic partnerships with international organisations. For example, strategic
partnerships have been established with the International Organization for Migration (IOM),
the United Nations Development Programme (UNDP), the World Health Organization
(WHO), the International Labour Organization (ILO), the UN High Commissioner for
Refugees (UNHCR), the World Food Programme (WFP), the United Nations Entity for
Gender Equality and the Empowerment of Women (UN Women) and the United Nations
Educational, Scientific and Cultural Organization (UNESCO).
Conclusion
While the EU has strategic partnerships or relationships with a number of actors, its
partnership with the ‘lucky 10’ clearly stands out and implies a strong focus on establishing
ties with influential countries founded in mutual economic and commercial interests. Unlike
bilateral strategic partnerships, region to region relationships are much more centred on
development cooperation.
Issues for discussion
 What is the future of the EU bilateral strategic partnerships? Are they aid
driven, and if so, what will happen once those countries are no longer eligible
for EU aid? How will the relationships move toward equal partnerships?
 Why are development aspects mostly covered in regional partnerships rather
than bilateral partnerships?
 How can these partnerships be used to tackle development challenges?
What should the EU do to ensure it remains an attractive partner in the eyes
of countries that are strategic, or will become strategic?
Further reading
On the Partnership Instrument:
http://ec.europa.eu/europeaid/how/finance/documents/prop_reg_partnership_instrum
ent_en.pdf
Gratius, S. (2011) 'The EU and the 'special ten': deepening or widening Strategic
Partnerships?', Policy Brief N. 76, Madrid: FRIDE.
Grevi, G. (2012) 'Why EU strategic partnerships matter', ESPO Working Paper n.1, June
2012, European Strategic Partnerships Observatory.
Hess, N. 2012) ‘EU Relations with “Emerging” Strategic Partners: Brazil, India and South
Africa’, GIGA Focus International Edition/English, Number 4, 2012.
Renard, T. 2012) ‘The EU Strategic Partnerships Review: Ten Guiding Principles’, ESPO
Policy Brief 2, April 2012.
Rogers, J. and Simón, L. (2012) 'Think again: ‘strategic partnerships’', European
Geostrategy, 23 May 2012 [online source].
European Strategic Partnerships Observatory website:
http://www.fride.org/project/28/european-strategic-partnerships-observatory
EU development cooperation.
Where have we got to? What's next? 44
Appendix 6
Background note – Session 4: Capability and capacity in future
EU development cooperation (prepared by Raphaëlle Faure)
The world is changing, new actors are on the rise and challenges are becoming increasingly
global. This moving context will require some adjustments and new thinking on the part of
development cooperation actors. In this age of uncertainty, development agencies need to
reform and adapt themselves. The nature of poverty is changing and this represents an
opportunity, as a recent article in The Economist (2013) put it: ‘Poverty used to be a
reflection of scarcity. Now it is a problem of identification, targeting and distribution. And
that is a problem that can be solved.’
In the short term, agencies are under pressure to perform better in terms of results and
transparency. In the longer term, development agencies will have to:
1. Engage more effectively in a government-wide approach on topics such as global
macro-economic management, climate change, security or state fragility.
2. Understand and be effective in delivering global deals, e.g. climate change or arms
control.
3. Demonstrate leadership in managing the international system, including the reform
of international agencies.
4. Step up engagement with the private sector, for example, through challenge funds.
5. Work more intensively in difficult environments, including especially fragile and
conflict-affected states (Maxwell, 2010).
Options for the future role of development agencies at the Member States
and EU levels
Visionaries
National development agencies could move away from a role of administering aid budgets
toward one of exerting political influence and acting as a thought leader (Evans and Steven,
2010). Countries like the UK are too small to act on their own; the way to continue having
an influence on development cooperation, is to develop a clear vision with which to
approach other actors and convince them to pursue shared goals together.
Efficient disbursers
Development agencies could concentrate on being efficient disbursers of official
development assistance (ODA) in a context where they face reduced demand on the one
hand and, on the other, increased competition from new kinds of business models and new
forms of finance (Rogerson, 2012).
Brokers and managers
Development agencies could broker and manage ODA and ODA-like funds, concentrating
on financial issues, but with a stronger focus on partnerships with the private sector and
EU development cooperation.
Where have we got to? What's next? 45
with non-traditional donors, and on expanding the share of funds being used for regional
and global public goods (Rogerson, 2012).
Deal-makers
Development agencies could become deal-makers and brokers across government and
internationally, providing a unique perspective and resources (financial and non-financial)
on the issues that shape global well-being (Rogerson, 2012).
Development architecture – the relationship with foreign policy
Many European countries have a merged structure at the policy level where development
cooperation decision-making falls under the prerogatives of foreign affairs ministries, while
the implementation of development cooperation is delegated to a specialised body. This
offers opportunities in terms of the potential for greater policy coherence; but it also
increases the risk of seeing short term objectives undermine longer-term development. The
EU system is hybrid in this regard, as some of the development policy responsibilities rest
with the External Action Service, while others fall under the Development Commissioner’s
authority.
Options for the EU as a development actor
The EU could play a stronger role in the provision of global public goods, or it could focus
on its role as an aggregator of its Member States’ influence. It could also do both by
identifying and focusing on areas where it has a comparative advantage.
To do this effectively, the EU will need to build capacity and expertise. Large institutions
often suffer from groupthink and struggle to harness new ideas and innovations. This is
partly due to the low turnover among senior staff who tend to build their career within a
given organisation, therefore having limited external experience compared to senior staff in
the private sector for instance Goldin, 2013). Building capacity that is relevant to today’s
environment in a large organisation like the EU will require joined-up thinking and action
across departments, together with strong leadership and capacity in order to operate across
policy areas and at national and international levels. This will be particularly challenging as
the European Commission is under pressure to reduce the size of its staff. Other
organisations have been through similar constraints the UK’s Department for International
Development (DFID), for example, managed to increase its pool of advisers (specialised
staff) by 45% while reducing its pool of administrative posts in 2011-12.
Issues for discussion
 How are development agencies responding to the changing development
landscape?
 What will the development agency of the future look like?
 Does a focus on the provision of public goods risk diverting attention from
the poorest?
 Is the ambition for the EU to become: (1) a great global multilateral aid
agency, (2) an agile catalyst for all sources of development finance, (3) a
powerful hub for coherent global policies far beyond aid, or (4) all of the
above?
EU development cooperation.
Where have we got to? What's next? 46
Further reading
Evans, A. and Steven, D. (2010) ‘Organising for Influence. UK Foreign Policy in an Age of
Uncertainty’, Chatham House Report, London; Chatham House.
Gavas, M. (2013) ‘The EU and Global Public Goods. Challenges and Opportunities’, DIIS
Report, Copenhagen: Danish Institute for International Studies.
Goldin, I. (2013) Divided Nations. Why global governance is failing, and what we can do
about it, Oxford University Press.
IPPR (2010) Policy Coherence and the Future of the UK’s International Development
Agenda, March, 2010, London: Institute for Public Policy Research.
Kharas, H. and Rogerson, A. (2012) Horizon 2025 creative destruction in the aid industry,
London: ODI.
Maxwell, S. (2010) ‘Visioning the aid agency of the future’, unpublished.
Rogerson, A. (2012) ‘The policy and institutional response to development challenges:
forging new partnerships’, in Inclusive and sustainable development: challenges,
opportunities, policies and partnerships, paper prepared for the International High
Level Conference to mark DANIDA’s 50th Anniversary: ‘Development policy in a
changing world’, September 2012.
Sumner, A. 2013) ‘Aid agencies of the future. Poverty, geography and the double
dilemma’, Guest blog, The Economist, 3 June 2013.
The Economist (2013) 'Poverty. Not always with us', The Economist, 1 June 2013.
EU development cooperation.
Where have we got to? What's next? 47
Annex – Number of adviser posts at DFID
Source: National Audit Office,
http://www.nao.org.uk/wp-content/uploads/2012/12/Briefing_DfID_Annual_Report_Accounts_201112.pdf
EU development cooperation.
Where have we got to? What's next? 48
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